The Georgia State Supreme Court has unanimously upheld a $40 million award to the family of a four-year-old boy killed in 2012 when the 1999 Jeep Grand Cherokee in which he was riding was rear-ended and burst into flames, Chrysler Group LLC v. Walden, 2018 Ga. LEXIS 154 (3/15/18).

In 2015, the jury returned a verdict of nearly $150 million in favor of the parents, but the trial court suggested a remittitur to $40 million, which was accepted by the plaintiffs. The Jeep’s fuel tank had been placed near the back of the vehicle, which plaintiffs said made it vulnerable to rear-end collisions. Four-year-old Remington Walden was a rear seat passenger who was trapped in the Jeep and burned to death.

The Supreme Court said that “evidence showed that Chrysler had long known that mounting a gas tank behind the rear axle was dangerous. Evidence also showed that Chrysler’s placement of the gas tank behind the rear axle was contrary to industry trends, which favored placing tanks in front of the rear axle.”

Fiat Chrysler lawyers contended that the fire did not cause boy’s death, but blamed the driver of the pick-up truck that rear ended the Jeep. On appeal, the defendant contended it was prejudicial to allow testimony about Chief Executive Sergio Marchionne’s compensation, which totaled more than $68 million, into evidence at trial. They also denied there was a safety issue and claimed the vehicles were no more dangerous than comparable SUVs built at the time. However, the National Highway Traffic Safety Administration (NHTSA) has linked more than 50 deaths to the Jeep fuel-tank issue.

Fiat Chrysler had to recall 1.56 million 2002-07 Jeep Liberty and 1993-2004 Jeep Grand Cherokee SUVs in June 2013 to address fire risks and they agreed to install trailer hitches to protect the gas tanks. The recall and a “customer satisfaction campaign” that covered the Jeep in the fatal Georgia crash occurred after CEO Marchionne held private talks with senior government officials in 2013.

The Supreme Court concluded “not that compensation evidence is always admissible to show the bias of an employee witness, or that it is never admissible, but that such evidence is subject to the Rule 403 analysis weighing the evidence’s unfair prejudice against its probative value.” And, “because Chrysler did not raise a Rule 403 objection to the compensation evidence at issue” the Court concluded “that under the particular circumstances of this case—where the jury’s evaluation of the bias and credibility of Chrysler’s CEO were central to the allegations in the case because the CEO was alleged to have specifically interjected himself in a federal safety investigation to the detriment of the plaintiffs—we cannot say that the prejudicial effect of the evidence so far outweighed its probative value that its admission was clear and obvious reversible error.”

Therefore, although the Supreme Court disagreed with the rationale of the Court of Appeals, it affirmed its judgment, and upheld the $40 million award.

Now that former Durham Transportation school bus driver Johnthony Walker has been found guilty of six counts of criminally negligent homicide by a Hamilton County jury, the question arises as to whether the felony convictions lift Tennessee’s caps on noneconomic damages for victims of his negligence. Walker was driving 37 children from Woodmere Elementary School when the wreck occurred on a winding Chattanooga road on November 21, 2016. Six children were killed.

Walker was also was convicted of 11 counts of reckless aggravated assault and seven counts of assault, and found guilty of reckless endangerment, reckless driving and using his phone.

Tennessee law limits noneconomic damages to a maximum of $750,000 in most cases, under a law passed by the Republican dominated legislature and signed by Governor Haslam in 2011. Economic damages not capped, however. Economic damages include loss of earnings. So for the children killed in the school bus crash, damage awards would appeared to be limited to $750,000 plus a projection of the child’s future earnings potential, reduced to present cash value. However, there is an exception, where the defendant’s negligent act or omission is considered to be a criminal act that results in the conviction of a felony.

TCA § 29-39-102(h) provides that:

“The limitation on the amount of noneconomic damages imposed by subdivision (a)(2) and subsections (b)-(e) shall not apply to personal injury and wrongful death actions:

(4) If the defendant’s act or omission results in the defendant being convicted of a felony under the laws of this state, another state, or under federal law, and that act or omission caused the damages or injuries.”

So, at least as to Walker, the $750,000 cap no longer applies. But what about his employer and other defendants who have been sued by the families of the victims? Do the caps still apply?

TCA § 29-39-102(j) states that:

“The liability of a defendant for noneconomic damages whose liability is alleged to be vicarious shall be determined separately from that of any alleged agent, employee or representative.”

Tennessee’s appellate courts have yet to rule on whether the exemptions from the caps apply to defendants other than the person convicted of the felony. However, it would seem, that at a minimum, the company that employed the felon should be held fully responsible for his actions and misdeeds, as they selected and hired him and were responsible for training and supervising him. The meaning of subsection (j) has not yet been interpreted by the Tennessee Supreme Court, but it does not appear to explicitly excuse an employer from full liability for all noneconomic damages caused by its employee found guilty of a felony.

Ahlborn has been brought back to life by Congress. The Bipartisan Budget Act (BBA) of 2018, just passed by Congress and signed into law by the President on February 9th, permanently repeals a provision from 2013 that would have allowed states to recover medical expense subrogation claims from any portion of a Medicaid beneficiary’s legal settlement. In other words, the law contains an outright repeal of language from an earlier budget bill that had overturned a Supreme Court decision in Arkansas Department of Health and Human Services et al. v. Ahlborn, 547 U.S. 268 (2006).

In Ahlborn, the Supreme Court held that Medicaid could only seek reimbursement from Medicaid enrollees injured by a third party from the portion of a settlement attributable to medical costs. The Ahlborn decision was universally lauded as promoting fair and proportionate settlements for Medicaid recipients. But, in 2013, the BBA included a provision overturning Ahlborn. This granted Medicaid a right of first recovery for full reimbursement of covered medical costs before plaintiffs could receive any recovery for lost wages, non-economic damages, or any other type of recovery. That was not fair, and sometimes gave Medicaid recipients little incentive to even seek recovery of damages from a third party.

Implementation of the 2013 language was delayed for several years, thanks primarily to lobbying by the American Association for Justice. The second and final delay expired on October 1, 2017, effectively overturning Ahlborn. However, repeal of the overturn was finally secured as part of the budget deal recently reached by the House and Senate. From this point forward, states cannot take more than their fair share of a Medicaid recipient’s legal settlement in a tort case, but they can be reimbursed from the portion of any settlement attributable to medical costs.

The 2018 BBA also extends third party liability requirements to CHIP benefits (Children’s Health Insurance Program) for the first time, however. So as we see states implementing the new provisions of the law, reimbursement for CHIP benefits may also have to be considered when settling a case involving a client eligible for CHIP.

Advocates for Highway and Auto Safety, an alliance of consumer, medical, public health, and safety groups and insurance companies and agents, recently released its 15th annual Roadmap of State Highway Safety Laws, detailing which states have optimal traffic safety laws and which laws need to be enacted. The organization’s stated mission is the adoption of federal and state laws, policies and programs that prevent motor vehicle crashes, save lives, reduce injuries, and contain costs. According to the report, more than 400 additional laws are needed across all states and D.C. to fully meet recommended optimal safety laws.

The report grades states and the District of Columbia in five categories: occupant protection, child passenger safety, teen driving (graduated driver licensing programs), impaired driving and distracted driving. States received an overall score combining the five categories.

According to the National Highway Traffic Safety Administration, nearly 15,000 lives of passengers ages 5 and older were saved in 2016. An addition 2,456 could have been saved with 100 percent participation of safety belts.

Child passenger safety

Two optimal laws in this category are recommended – rear facing through age 2 and booster seats. Booster seat laws “require that children who have outgrown the height and weight limit of a forward-facing safety seat be placed in a booster seat that should be used until the child can properly use the vehicle’s seat belt, when the child reaches 57 inches in height and age 8.”

Teen driving

Advocates recommends six laws:

Minimum age of 16 for learner’s permit

Six-month holding period provision

50 hours of supervised driving provision

Nighttime driving restriction provision

Passenger restriction provision

Age 18 for unrestricted license

Impaired driving

Three optimal laws for impaired driving are recommended: ignition interlock devices for all offenders, child endangerment laws, and open container laws.

According to MADD, ignition interlock laws have stopped more than 1.77 million attempts to drive while drunk. A University of Pennsylvania study reveals that ignition interlock laws reduced alcohol-involved crash fatalities by 15 percent.

Child endangerment laws increase DUI penalties when a minor child is in the vehicle. Every state except New Mexico, South Dakota and Vermont has adopted a child endangerment law.

Only seven states have not banned text messaging for all drivers. But to date, only 19 states have yet to install a GDL cellphone restriction.

Overall scores

Tennessee, Georgia, Alabama and North Carolina fell in the middle of the pack, with a yellow rating as given to 31 states. A yellow rating required six to 10 of the 16 optimal laws,. Only six states and D.C. qualified for a green rating: California, Delaware, Louisiana, Oregon, Rhode Island and Washington.

No state got a green rating without a primary enforcement seat belt law covering passengers in all seating positions (front and rear), and no state got a green rating if it had repealed an existing all-rider motorcycle helmet law within the previous 10 years.

Thirteen states received a red rating, which indicates fewer than seven of the 16 optimal safety laws.

Tractor trailer safety

Although states were not graded on large truck safety laws, a small section in the beginning of the report addressing such laws was included.

“Available safety technologies such as speed limiting devices and automatic emergency braking (AEB) could already be preventing crashes and mitigating severity if they were required on the entire fleet,” the reports suggests. “Further, trucks should be equipped with underride guards to prevent horrific and violent crashes when a vehicle goes under the rear or side of a truck.”

Advocates also encourages the use of lane departure warning systems and advanced driving assistance systems in large trucks. Many of those technologies are already in place in newer trucks. However, they are not required and are often add-ons for an additional cost.

Increases to $1,000,000 for “catastrophic loss or injury” (spinal cord injury resulting in paraplegia or quadriplegia, amputation of two hands or feet, 3rd degree burns over 40% of the body), T.C.A. § 29-39-102(d).

Caps do not apply where there was specific intent to injure, falsification of records, influence of drugs or alcohol, or conviction of felony T.C.A. § 29-39-102(h).

Experts must come from TN or a contiguous state (with exceptions) and must have been practicing in that profession or specialty within one year preceding date of injury or wrongful act, T.C.A. § 29-26-115(b).

Clear and convincing evidence, bifurcated trial, limitations on vicarious liability, capped at twice compensatory damages or $500,000, whichever is greater, subject to various exceptions including specific intent, falsifying records, being under the influence of drugs or alcohol, or conviction of felony, T.C.A. § 29-39-104.

Miscellaneous:

Hospital liens are limited to one-third of the total recovery (T.C.A. § 29-22-101), and only include charges that were reasonable and necessary, West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014)

PLEASE NOTE: This is intended only as a summary and quick reference guide for lawyers. It is not a comprehensive review of all applicable law and each practitioner should use it only as a starting point for further research.

If you are an attorney, and you would like to have a laminated copy of our Essentials of Tennessee Tort Law – Personal Injury and Death Cases, 2017 Ed., send an email to kelsey@thehamiltonfirm.com

Jean Dedmon had sued for injuries she sustained in a car accident, and attached the bills from her hospital and doctors to her complaint. While the case was pending, the Tennessee Supreme Court issued its opinion in West v. Shelby County Healthcare Corporation, 459 S.W.3d 33 (Tenn. 2014), and held that based upon the specific provisions of Tennessee’s hospital lien statutes, T.C.A. §§ 29-22-101-107, the hospital’s lien was limited to the discounted amounts paid by the patients’ insurance companies.

After West, the defendants in Dedmon argued that the West decision also changed the law in Tennessee for all cases involving personal injuries, contending that personal injury plaintiffs who have insurance can no longer use the full medical bills to prove their medical expenses. The trial court agreed and limited the plaintiffs’ proof on medical expenses to the discounted payments the hospital and doctors had contractually agreed to accept from Mrs. Dedmon’s insurance company.

The plaintiffs appealed to the Court of Appeals, which reversed the trial court, holding that West does not apply in personal injury cases outside the context of the lien statute, Dedmon v. Steelman, 2016 LEXIS 386 (Tenn. App. 2016). However, while plaintiffs who have insurance can use full, undiscounted medical bills to prove medical expenses, the Court of Appeals also said that defendants could use discounted insurance payments to prove that the undiscounted bills were not reasonable. That, of course, opens the door to collateral source evidence.

The Tennessee Supreme Court agreed that its holding in West was not intended to apply to all personal injury cases, but reversed the Court of Appeals on the collateral source issue, holding that insurance payments and other benefits received by plaintiffs that do not come from the defendant (benefits that come from “collateral sources”), may not be used to reduce the defendant’s liability to the plaintiff.

The Supreme Court explained that Tennessee has always followed the collateral source rule, and that it prevents defendants from telling juries about plaintiffs’ insurance and other such benefits. So, after a thorough review, the Supreme Court declined to alter existing law in Tennessee, and held that the collateral source rule applies. Therefore, the plaintiffs may introduce evidence of Mrs. Dedmon’s full, undiscounted medical bills as proof of her reasonable medical expenses, and the defendants may not introduce the discounted rates paid by Mrs. Dedmon’s insurance company for any purpose. The defendants can use other evidence to show that the full medical expenses are not reasonable, however, as long as that evidence does not violate the collateral source rule.

One very interesting point made by the Court was: “it is evident that medical expenses cannot be valued in the same way one would value a house or a car,” since “health care services are highly regulated and rates are skewed by countless factors, only one of which is insurance.” The Court concluded that there is no reason to believe that discounted insurance rates are a more accurate way to determine the value of medical services.

The bottom line: While the Supreme Court acknowledged that the collateral source rule is imperfect, it remains the law in Tennessee.

As we look forward to cooler weather this fall, we should be reminded we are more likely to encounter fog on our highways. Fog is prevalent in areas where moisture is abundant, such our southern rivers and lakes. However, fog can occur anywhere. Abundant condensation nuclei enhances the formation of fog. Fog may form (1) by cooling air to its dew point, or (2) by adding moisture to air near the ground. Fog can also be be prevalent in industrial areas where byproducts of combustion provide a high concentration of these nuclei. Fog often develops along I-75 and other roads close to the Hiwassee River in Tennessee, near Bowater and Arch/Olin Chemical. Be careful.

As of October 1, 2017, the Centers for Medicare and Medicaid (CMS) has implemented a new policy regarding Medicare Secondary Payer (MSP) reimbursements and what are known as liability Medicare set-asides or LMSA’s. At the request of CMS, the Medicare Administrative Contractor will begin to track the existence of any LMSA’s related to a claim and deny payment for items or services that it deems should be paid from that LMSA rather than being paid for by Medicare. According to CMS, “Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”

What does this mean? Medicare’s authority in this area has not changed, nor has there been any statutory or regulatory change. However, this new policy will likely generate confusion and raise additional issues when liability cases for Medicare eligible clients are settled. It is important to understand that this new policy does not affirmatively create a new mandate for Medicare beneficiaries to create a liability set-aside.

Under Medicare Secondary Payer (MSP) provisions, Medicare Set-Asides are not a requirement; they are a recommendation for protecting Medicare’s best interests. Medicare beneficiaries are required to notify Medicare when a liability claim is made against a defendant with liability insurance. If the litigation results in a settlement, Medicare will expect reimbursement for any expenses it has covered that should have otherwise been paid for out of the settlement. If Medicare is billed and pays for any future injury-related medical costs, Medicare may also seek reimbursement should it determine its future interest was not adequately protected.

It is important that Medicare’s interests be considered when a liability case is settled. When Medicare has paid some of the medical expenses it is mandatory, and Medicare has to be reimbursed. If the settlement includes money for future medical care, the situation is more complicated. In those cases where the client is Medicare eligible, a LMSA may be appropriate, and perhaps recommended. In any event, in all cases, Medicare’s interest should be carefully considered if the settlement includes any money for future medical expenses. At minimum, clients should be advised that Medicare could decide that some future medical expense was caused by an injury for which the client has already received compensation, and that Medicare would refuse to pay for it.

CMS has yet to provide a framework for reviewing LMSAs as it has for Workers’ Compensation Medicare Set-Asides, making it difficult to determine their necessity and whether the MSA is being funded with the appropriate amount. For the time being, liability settlements will have to be evaluated on a case-by-case basis.

Although the circumstances were unusual, the Tennessee Supreme has clarified that under Tennessee law a wrongful death claim did not belong to the decedent, but passed to decedent’s husband upon her death, Linda Beard v. James William Branson and Trinity Hospital, L.L.C. The husband had filed a pro se wrongful death malpractice lawsuit shortly before the one-year statute of limitations lapsed. After expiration of the limitations period, he retained an attorney and filed an amended complaint. The decedent was also survived by two daughters. The defendants filed motions for summary judgment arguing that the husband’s initial pro se complaint was filed in a representative capacity on behalf of the decedent and the other statutory beneficiaries and that it was, therefore, void ab initio. They contended that the amended complaint could not relate back to the date of the initial complaint, and the lawsuit was therefore time-barred. The trial court denied the summary judgment motions and held a jury trial where the jury found both defendants liable and awarded damages. The Court of Appeals had reversed and held that the claim belonged to the decedent and therefore the husband could not file a lawsuit without a lawyer.

This all started back in 2004, when Ruth Hartley was admitted to Trinity Hospital in Erin, Tennessee for elective colon surgery. She developed complications from the surgery and died. It is a sad commentary on our judicial system that this case has gone on for 13 years. A unanimous Supreme Court held that under the plain language of Tennessee’s wrongful death statutes, the decedent’s right of action “pass[es] to” the surviving spouse upon the decedent’s death, and the surviving spouse asserts the right of action for the benefit of himself and other beneficiaries. Tenn. Code Ann. § 20-5-106, reversing the Court of Appeals, but sending the case back to the intermediate appellate court for consideration of other issues.

The opinion by Justice Holly Kirby is recommended reading, as she discusses Tennessee’s confusing statutory wrongful death scheme, which she describes as “a hybrid between the survival and wrongful death statutes, resulting in a statutory scheme with a ‘split personality.'”